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From the Business Innovation Factory Summit, my presentation on the Past, Present and Future of Music.

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Here is the story they wrote about me for the Summit.

Back in the seventies, David Kusek walked from his freshman dorm at the University of Connecticut, down a long hill to the music department for classes several times a week. When the routine got a little stale, he began taking other routes. One detour took him past the computer science building where he quickly noted the “hot” cars in the parking lot. Naturally, he began taking computer science courses.

Great ideas are born in such serendipitous ways. When Kusek melded his deep-rooted love of music with his newfound affinity for computers, he opened up unchartered territory in the music world by inventing the electronic drum. His company, Synare, took a relatively unfamiliar technology (computers) and combined it with an indigenous musical tradition that tuned percussion to the key of the song. Kusek also knew how to start a business, develop products, and take them to market. Having the right price point added to the appeal of the electronic drum and attracted the attention of fledgling artist Donna Summers who took a chance on the new sound and propelled her career.

“For better or worse, we had our part in the disco age,” Kusek says. “We helped to define the sound of the era.”

Taking another detour for curiosity’s sake led Kusek to study animal communication in California with noted biologist John Lilly. They were trying to use sound to communicate with dolphins when the Apple II computer came to market.

Kusek was already synthesizing the sounds that dolphins make, so he devised a way to do the same with musical instruments, to “put the Apple II between the instruments.” He explains that his new company, Passport Designs, “broke music down into a language of expression, which we mapped to simple computer code and connected it to the instruments. We created a computer language for music.” Witness the birth of Musical Instrument Digital Interface (MIDI), developed by a group of companies including Passport, which has left an indelible mark on the music industry by becoming the prototype for all music interface software.

If only they had patented it.

Kusek, along with Dave Smith and the other people responsible for creating MIDI could have made millions with MIDI, but he remains philosophical about this missed opportunity. “Maybe the reason why it took off was that it was absolutely free,” he says. “It was a compact way of representing music in a simple and cheap format.”

Kusek has learned to appreciate and even extol the benefits of free and open access to music. He helped create musical notation software and was instrumental in developing enhanced CDs for the commercial market. He supports the creation of a music utility to “monetize” the immense wave of file-sharing that has become standard operating procedure in the industry. He reasons that Internet users already pay for access to a network that supplies the music, so why not add a nominal fee to the ISP bill and allow for legal trading? With approximately 80 million households using the Internet, a monthly music utility fee of $3 would generate almost $3 billion in annual music sales from households alone.

“If you tracked what was downloaded,” Kusek says, “you could create a system where the money flows exactly to the people who are listening. It could be a 30 to 40 billion dollar business again, as it was in the nineties.”

Admittedly, this system would spread those billions among a larger base of artists, establishing an unfamiliar sense of parity in the music industry. But Kusek says that the megastar is gone, anyway: “In the last four to five years, new artists coming to market are not making anywhere near what artists like Madonna made. I think that happens because of file-sharing, but also because the music industry was taking its eye off what was important. In the mid-nineties, the record companies thought their customers were WalMart and Target. They had no connection to their audience at all.”

File-sharing may have killed the megastar, but not the art, Kusek insists. “I think it’s a great time to be an artist,” he says. New performers may have smaller audiences, but they also have a more efficient way of finding that audience and staying connected to it through online chats, newsletters, and blogs. And instead of the record industry’s marketing machine pushing music at fans with an $18 plastic CD case and the elaborate promotion attached to it, word of mouth is shaping the musical tastes of the rising generation.

As it should, according to Kusek. He has brought technological innovations to the music industry by accepting such change and using it to open up the possibilities of sound. He envisions music flowing in a clean stream wherever people communicate, allowing artists and fans to express themselves freely.

Here’s an email from Trent Reznor of Nine Inch Nails to his fans. Here is a band that is inventing their own future and building their fan base directly. Take note, this is how it is done… Awesome. (Thanks to Mike King for this one).

Subject: Nine Inch Nails survey

Message from Trent:

Hello everyone. I’d like to thank everyone for a very successful year so far in the world of Nine Inch Nails. I’m enjoying my couple of weeks off between legs of our Lights In The Sky tour and got to thinking… “wouldn’t it be fun to send out a survey to everyone that’s shown interest in NIN?” Well, that’s not exactly how it went, but regardless – here it is. As we’ve moved from the familiar world of record labels and BS into the unknown world of doing everything yourself, we’ve realized it would benefit us and our ability to interact with you if we knew more about what you want, what you like, what you look like naked, etc. I know it’s a pain in the ass but we’d truly appreciate it if you’d take a minute and help us out. As an incentive, everyone who completes the survey will be able to download a video of live performance from this most recent tour (and I know what’s going through your little minds right now: “I’ll just grab this off a torrent site and not have to fill out the survey!!!” and guess what? You will be able to do just that and BEAT THE SYSTEM!!!! NIN=pwn3d!!!) BUT What if we were to select some of those that DO complete the survey and provide them with something really cool? I’m not saying we’ll ever get around to it, but if we did maybe something like signed stuff, flying someone to a show somewhere in the world, a magic amulet that makes you invisible, a date with Jeordie White (condoms supplied of course), you know – something cool. See, you’d miss that opportunity AND be a cheater. Do the right thing – help us out. You’ll feel better.

Thank you and I’ve had too much caffeine this morning, Trent

You wanna take the survey? Click here
.

Derek is the musician who started CD Baby, the world’s largest online music store for independent musicians. Here are some current stats from the site:

– 242,846 artists sell their music at CD Baby
– 4,574,622 CDs sold online to customers
– $83,590,381 paid directly to the artists

With more than 2 million digitized tracks under management, CD Baby is also the largest provider of independent music for iTunes… and it all started as a hobby. A lot to learn here.

Tim Ferriss is the author of the hugely popular book The Four Hour Workweek.

Here is a recent interview between Derek and Tim. Interesting to see how Derek adopts Tim’s philosophy for CD-Baby. Note that Derek just recently sold CDBaby to Disc Makers and is now a free agent.

http://services.brightcove.com/services/viewer/federated_f8/271539270

From my co-author Gerd Leonhard – a presentation on the future of music.

Music2.0 is a hard-hitting, provocative and inspiring collection of essays and blog posts on the future of the music industry from my co-author Gerd Leonhard. The book continues and expands on the ideas and models presented in our book “The Future of Music”, which has become a must-read work within the music industry, worldwide, available in English, German, Spanish and Italian.

Music2.0 describes what the next generation of music companies will look like and the new principles that will define the next iteration of the music business.

Music2.0 presents the best of Gerd’s writings from the past four years. As you move from 2003 to 2007 in the book, the evolution of various ideas and expressions can clearly be observed.

Check out Music2.0 here!

It is one thing to talk about the impact of technology on the music business, and it is another thing to actually do something positive with it. The video clip below describes some of the work that we have been doing here at Berklee to address the opportunities brought about by technology on the business of music education.

http://www.artistshousemusic.org/player/flvplayershare.swf?file=http://www.artistshousemusic.com/video/berklee/berklee.flv

Check out the online music school Berkleemusic.com

See other similar video clips at ArtistHouseMusic.

Great to see a band of this stature make a bold move like this.  Radiohead has released their latest album "In Rainbows" online and for free, if you want it.  They will also accept whatever amount you wish to pay for the songs.  Brilliant!

Bertis Downs, manager of R.E.M., says "This is the sort of model that people have been talking about doing,
but this is the first time an act of this stature has stepped up and
done it. . . . They were a band that could go off the grid, and they
did it."

Just watch what happens when they launch their tour!  Tickets, t-shirts, hats, box sets, other goods – watch the cash register ring.  KA-CHING

LA Times reported the story on Sunday.

Watch this week’s Nightly Business Report on NPR and Public Television to see a special series on the Music Business, featuring Dave Kusek and Gerd Leonard.

"On December 6th, 1877, Thomas
Edison shouted a nursery rhyme into his new talking machine. The recording
industry was born.

Over more than a century, the technology evolved from wax cylinder to
shellac platter to long-playing vinyl to cassette tape to compact disc.

But the business model remained the same: The artist recorded to the
label`s satisfaction, the label did the manufacturing and handled the
distribution, and the consumer could take it or leave it.

That changed in the mid-1990s, when personal computers got the ability
to make digital compact discs. Unlike analog, digital recordings are
simply computer data files, and the tools need to create, capture and
manipulate digital music are inexpensive, high quality and widely
available.

Now, consumers can use the recording industry`s compact disc to create
their own compilations, re-edit to produce derivative products, and yes,
make perfect copies.

When the cost of the blank needed for a copy fell to pennies, the
industry`s business model fell apart.

If the ability to easily copy compact discs was a problem for
the recording industry, Napster and other file-sharing systems were a
disaster. Created in 1999, Napster let consumers freely trade the computer
files of songs with others over the Internet. The artists, publishers and
recording companies never saw a dime.

Nearly 40 million people were said to be using Napster when
it shut down. And for every Napster that was shut down, another method to
share files sprang up.
The industry`s trade association sued thousands of people, mostly
college students, to stop the practice. The lawsuits, tens of thousands by
some counts, continue today.
"

More info here.

Kusek
About David Kusek

David Kusek is a musician who has been inventing the future of music for the past twenty-five years. He was one of the first to capitalize on the commercial potential of computers and music. As an early synthesizer and electronic music pioneer, Dave cut his teeth on innovation.

At the age of nineteen, he co-invented electronic drums at Synare, which helped ignite the disco era. In 1980, he founded the first music software company, Passport Designs, which made it possible for musicians to record and produce their music at home with its award-winning software.

Kusek is also a co-developer of the Musical Instrument Digital Interface (MIDI) standard that opened up electronic music to literally millions of people. His efforts, along with others, set the stage for the desktop music market that we have today. In 1993, Kusek, with A&M Records, designed and developed the first commercially available enhanced CD that connected audio CDs to a personal computer. He also produces interactive DVDs for BMG Music, Windham Hill Records, and Berklee Press.

Today, David Kusek innovates at Berklee College of Music in Boston, Mass., the premier school for aspiring professional musicians for over half a century. Dave is Vice President of Berklee Media, the continuing education division of the college. In that capacity, Dave oversees some of the college’s most visionary projects. These include: the college’s online extension school Berkleemusic berkleemusic.com, a major initiative to expand music education worldwide; Berklee Shares berkleeshares.com, a venture that taps the potential of digital networks and music content licensing by making a broad selection of Berklee’s curriculum free and universally available online; and, Berklee Press berkleepress.com the publishing arm of the college. Kusek also provides strategic consulting and advisory services to companies and individuals involved in the music and entertainment industries.

Kusek has written for or been quoted in Billboard, Boston Globe, New York Times, Wired, Christian Science Monitor, Associated Press, and San Francisco Chronicle, Forbes, NBC-TV, Nightly Business Report, NPR, Corante, The Deal, Inside Digital Media, the Financial Times.  Kusek has been interviewed by over 25 radio stations nationwide. He has been a speaker and lecturer at Berklee College of Music, MacWorld, Comdex, PC World, NAMM, AES, and California State University.

Dave lives near Boston and can be contacted at dkusek@digitalcowboys.com.

Gerdleonhard_1
About Gerd Leonhard

Gerd Leonhard is a respected music futurist and oft-quoted visionary, a well-known music industry executive and music business entrepreneur, a sought-after strategic adviser and music industry super-node and still a performer (guitar), writer, and producer. A native of Germany, Gerd has spent more than twenty years in the U.S. music, e-commerce, and entertainment technology industries, and is equally at home in the U.S. as well as in Europe.

During the dot.com days, Gerd was the founder and President/CEO of LicenseMusic.com, a company that revolutionized music licensing, reducing the average transaction time for music licenses from six weeks to two hours. LicenseMusic, Inc. served thousands of clients from 1996-2002, including Disney, Paramount Pictures, and Fox TV.

He is the Founder and CEO of ThinkAndLink (TAL), a boutique advisory agency based in Basel, Switzerland and San Francisco. TAL connects people, ideas, companies, and resources in the converging sectors of entertainment and technology, and catalyzes their development. As CEO of ThinkAndLink, he serves as Senior Advisor to Media Rights Technologies, BlueBeat, and ShareTheMusic Networks. Gerd sits on the Advisory Board of Musicrypt, Inc., and works with dozens of startups and new ventures in the entertainment and technology industries in Europe and the U.S.

Gerd served as the Executive Producer of the pan-European talent event EuroPopDays, as Expert Advisor on the Cultural Industries to the European Commission in Brussels in 1993-1996, and as Senior Strategic Adviser to Rightscom Ltd. (London). Gerd graduated with a diploma in Jazz Performance (Guitar) from Boston’s Berklee College of Music (1987), and won the college’s highly acclaimed Quincy Jones Jazz Masters Award. His performance credits include touring internationally, including opening engagements for major acts such as Miles Davis.

Gerd has been quoted in Billboard, Variety, Hollywood Reporter, San Francisco Chronicle, Business2.0, Wall Street Journal, and Wired, and continues to speak, moderate, and/or present at the music industry’s biggest events. He publishes his music business visions at MusicFuturist and you can visit his Web site at gerdleonhard.com.

Gerd currently resides in Basel, Switzerland and can be contacted at gleonhard@gmail.com.

Contact

The authors can be contacted via snail mail at:

David Kusek
Berklee College of Music
1140 Boylston Street
Boston, MA USA 02215

Press contact:

Lori Ames
212-620-4080 x12
lori@wesmanpr.com